Can Severance Pay Be Taxed?

With Billions of Dollars at Stake, the Supreme Court Has Agreed to Address the Issue

A year ago, we reported a disagreement between two federal appeals courts as to whether payroll taxes are due on severance payments made to laid-off workers. We predicted the issue could wind up before the U.S. Supreme Court.

Now it has. In October, the court said it would hear one of the cases, U.S. v. Quality Stores, which the Sixth Circuit decided in favor of taxpayers. Oral arguments are scheduled to begin Jan. 14.